Pound Canadian Dollar Exchange Rate Climbs as UK Leadership Race Nears End
The Pound Canadian Dollar (GBP/CAD) exchange rate is firming this morning as Rishi Sunak looks tipped to become the next UK Prime Minister.
At the time of writing the GBP/CAD exchange rate is trading around CA$1.5537. Which is roughly up 0.8% from this morning’s opening rate.
Pound (GBP) Gains Ground amid Last Leg of PM Race
The Pound (GBP) is up against the majority of its peers this morning as Rushi Sunak looks to be Liz Truss’s successor.
Investors are reacting well to the news as Sunak edges closer to downing street with at least 165 parliamentary backers. This comes as Boris Johnson stepped out of the race on Sunday, which surprised markets.
GBP investors appear hopeful that a Sunak administration will help to calm recent market jitters. As opposed to Johnson who analysts fear could have injected fresh political risk into the Pound.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, comments:
‘[Johnson] had threatened to cause fresh political instability, given that it’s less than two months since he left the job, so his retreat from the race brought a sigh of relief for sterling and an even bigger sigh of relief on the bond markets.’
Despite GBP’s gains this morning, it’s possible that the currency is being tempered by the release of the flash PMIs for October. Both the service and manufacturing sectors were shown to have contracted. The services index dropped from 50 to 47.5, while the manufacturing index fell from 48.4 to 45.8.
Canadian Dollar (CAD) Falls in Tandem with Oil Prices
The Canadian Dollar (CAD) is in retreat this morning as oil prices dip following concerns over demand.
At the time of writing WTI crude oil is down roughly 2% at around $83 per barrel. The slip in oil prices is being attributed to a tightening of demand ahead of a global recession, which is making investors cautious.
The commodity has now largely relinquished all of the gains which followed the Organization of the Petroleum Exporting Countries (OPEC) production cut announcement. Efforts by the US to suppress prices by release strategic reserves appears to be having the desired effect.
Pound Canadian Exchange Rate Forecast: GBP to Firm amid Political Climate?
Later today, the Pound Canadian Dollar exchange rate could continue to gain ground as GBP investors focus on the UK politics.
The next Prime Minister could be announced at 2pm today. If Sunak wins the race, then the Pound could extend its gains. However, any developments like Penny Mordaunt reaching the required MP backing to remain in the race could infuse volatility into Sterling.
Turning to Canada, their manufacturing sales figures for September are due. If they print as expected, then the growth in sales could calm CAD’s movements.
In the meantime, the commodity linked ‘Loonie’ will likely continue to trade in line with the oil markets.